Canada pushed for Airbus deal as Bombardier courted China

MONTREAL/PARIS: The Canadian government encouraged Bombardier to make a deal with Airbus SE for its CSeries planes to thwart a potential venture with Chinese investors, according to five sources familiar with the matter. It signalled its preference for Airbus after Bombardier failed to reach an agreement with Boeing Co earlier this year that would have given the US company a stake in the CSeries jetliners, according to the sources.
The Canadian government’s role has not been previously reported. Prime Minister Justin Trudeau’s administration took a calculated risk in steering Bombardier toward Airbus, according to the sources.
It helped save a key product for Bombardier and likely resolved a brewing trade dispute with the United States, but potentially set back efforts to improve trade and economic ties with China. The deal with Airbus came at a critical time for Bombardier.
Its $6 billion CSeries programme, already losing money, had become the subject of a trade dispute in which Boeing charged in a complaint to US authorities that the jetliners benefited from Canadian government subsidies and unfair pricing. Bombardier had considered a Chinese partnership as early as 2015, after talks about a possible merger with Airbus became public and fell apart.
This year, as negotiations with Boeing over a CSeries partnership faltered and concerns about the future of the program mounted, Bombardier’s interest in a deal with China intensified, two sources said.
The prospect of such a deal raised concern within the Canadian government, two of the sources said, where officials believed jobs or technology could be “siphoned away” to China.
They also expressed uneasiness about what some saw as inadequate Chinese safeguards against intellectual property theft.
In a series of calls with Bombardier in August and September, Innovation Minister Navdeep Bains and Trade Minister Francois-Philippe Champagne, as well as senior officials in Trudeau’s office, urged Bombardier to contact the European company, the two sources said.
“From the federal government’s point of view, anything was better than a link-up with China,” according to an Ottawa source.
The source said the government suggested to Bombardier that Chief Executive Alain Bellmare reach out to his counterpart at Airbus, Tom Enders.
The government’s efforts eventually helped pave the way for an October 16 agreement in which Airbus took a majority stake in the narrow-body, medium-range CSeries jets for one dollar.
But they also came at a time when Ottawa is pushing for closer economic ties with Beijing.
Canada, concerned about Washington’s threats to scrap the Nafta trade deal, wants to bolster relations with China in order to cut its heavy dependence on exports to the United States. — Reuters